Pharmacy Law: Three-Year Delay in Medicaid Suspension Appealed

Author: Joseph L. Fink III, BSPharm, JD

Dr. Fink is professor of pharmacy law and policy at the University of Kentucky College of Pharmacy, Lexington. Issue of the Case
A case arising in a Midwestern state focused on a nearly 3-year delay by the federal government in imposing on a pharmacist an order of exclusion from participation in health care programs receiving federal funding. The pharmacist seeking review of that decision in federal court argued that the delay was so protracted that it violated his rights.

Facts of the Case
The case originated when the pharmacist made a false statement to a state-administered Medicaid program. On this point, he failed to disclose to the agency that an entity to which he provided medications was not complying with federal regulations for their storage and handling. He also caused prescription medications to become misbranded when he labeled them with incorrect expiration dates and lot numbers. These were medications that had been returned to the pharmacy, where they were recycled and repackaged for reissuance. The first offense occurred during the fall of 1996, while the second took place early in 1998.

Those transgressions led to his conviction in March 2001, and resulted in a prison sentence of 5 months and forfeiture of the property he owned that had been used in furtherance of the criminal acts (ie, unlawful distribution of the medications). Additionally, he agreed to a suspension of his license to practice pharmacy for 2 years.

Thirty-five months after he was convicted, he received notification that the federal government was excluding him from participating in any federal health care programs for a 5-year period. He discovered that he could not practice in a pharmacy that handled Medicare or Medicaid prescriptions, or any prescriptions financed by other federal health programs (eg, TRICARE). It is noteworthy that this February 2004 notice of exclusion likely fell after he had completed his prison term and after his license to practice pharmacy had been restored.

He argued that the 35-month holdup was unreasonable and requested that the federal court reverse the decision of the US Department of Health and Human Services because of the agency’s tardiness in notifying him of the decision.

The case was first handled by a US magistrate judge. This is an official of the US District Court appointed for an 8-year term by the judges of that court. Magistrate judges can conduct a wide variety of judicial proceedings, determined by the local judges, to facilitate handling of both civil and criminal matters before the court. The magistrate judge reviewed the matter and recommended to the US District Court that the decision of the federal agency be reversed and the matter sent back for further consideration at the departmental level. The pharmacist objected to the magistrate judge’s recommendation. In the pharmacist’s view, such an action represented a victory for the agency, because the remand to the department and subsequent action there would likely run beyond the end of the pharmacist’s period of exclusion. He argued that the US District Court should rule in his favor because of the delays by federal officials.

The Court’s Ruling
The court did not agree with the pharmacist, and as a result, the case was sent back to the federal agency.
The Court’s Reasoning
As a general rule, when a court is asked to engage in judicial review of the action of an administrative agency, it generally cannot evaluate the evidence on its own to reach conclusions regarding the facts. It is bound by the determinations of the agency in that area. Courts feel that fact-finding is better handled on the administrative agency level rather than on the court level in such cases. Moreover, judges tend to have the view that the decisions of the agency are to be accorded substantial weight, because agency officials deal with such issues every day and possess subject matter expertise.

The magistrate judge had concluded that agency action cannot be unreasonably delayed—a factual conclusion. Having an unreasonable delay was, in the view of the court, something to be taken up at the agency level, not at the level of a US District Court engaged in reviewing the agency action.

Additional Note: The federal government has gotten much more active in pursuing such exclusion actions against all health professionals, including pharmacists who, in their view, abuse federally funded health care programs. Such an exclusionary action can have tremendous impact on a pharmacist, because nearly all pharmacies dispense medications covered under a health program receiving federal funding. Mounting a challenge to an exclusion action can be expensive and, as seen in this case, holds little hope for success. ■